Financial institutions actively evaluate their reward services provided to their consumers to determine how best to meet their consumers' needs. In doing so, they often move consumers from one account to another account in an effort to match their consumers' life style changes. For example, upon an increase in income of a consumer that is an account holder of the financial institution, the consumer may be upgraded from a student card account having one set of conditional rewards to a gold card account having a different set of conditional rewards. Thus, financial institutions compete on how well they match their consumer's life style needs.
Historically, financial institutions have had to re-issue a new account number to the consumer when a new type or category of account is associated with the consumer. The cost of card re-issuance is expensive and is inconvenient to the consumer. For example, the change in account number results in a disjointed account history for the consumer. The consumer that has provided the consumer's account number to merchants for recurring bill payments or other convenience programs often experiences challenges when the consumer's account number is changed. Other problems can include the consumer having to re-provide the new account number to the merchants for a resetting of the consumer's bill payment profile with the issuer of the account to the consumer. Moreover, there may be a lag time between the implementation of the change in conditional rewards and the consumer's means for benefiting therefrom as the account holder goes through the process of accepting the upgrading of the type of account they are to receive, receiving the new card containing the new account number, and then activating the card with the new account number. This lag time affects the profit and loss margin for the financial institutions associated with the account. For example, even though account holder X has been upgraded from a gold card to a platinum card, until the card holder X receives and activates the new upgraded card, the consumer cannot access the new conditional rewards, resulting in a loss of business to merchants and financial institutions that lose profit from the higher fees that can be collected on the upgraded card.
Account activity has historically been processed at a Bank Identification Number (BIN) level (e.g.; switching, routing, category reporting, key processing such as card verification, personal identification number, as well as account holder authorization services). A BIN is an identifier, such as a six digit number, that represents various characteristics of an account. For example, a BIN may convey information such as: the financial institution at which an account resides, the type of the account (e.g.; consumer credit, consumer debit, gift card account, and commercial), and the account category. A plurality of accounts may have the same BIN number. Consequently, the BIN level processing occurs at an aggregate.
The BIN is also historically coupled to the conditional rewards to the consumer. For example, a BIN reflecting a gold account category may provide a gold account holder various conditional rewards for transactions on that account. These conditional rewards can be, for instance, purchase security insurance, travel accident insurance, personal identity theft coverage, road side service, concierge services, restaurant reservation priority, or an airline ticket upgrade. In contrast, a base account category would not provide the base account holder with such conditional rewards. Although the account category of an account is intended to reflect the spending nature of an account holder and encourage like spending, the account category is a coarse tool for accurately measuring consumer spending.
The aggregate nature of BIN level processing of conditional rewards hinders the targeting of appropriate account holders. A consumer can accept a grouping of conditional rewards at the aggregate level of the BIN, even though the consumer may not benefit from all of the conditional rewards within the grouping of conditional rewards. For example, a loyalty program may provide all gold level account holders having a specific BIN number access to a certain bonus-mile-to-dollar ratio. However, gold level account holder X may not be much of a traveler. Therefore, even though the gold level account holder X may be paying for the privilege of having the bonus-mile-to-dollar ratio through yearly subscription costs, the gold level account holder X is not gaining any benefit from it.
Therefore, relying on BIN to process account conditional rewards includes drawbacks such as: an account holder losing the opportunity to utilize specialized conditional rewards; an account holder needing to subscribe to multiple accounts in order to have access to a combination of conditional rewards not provided by any single account; a transaction handler or a financial institution losing the profit from higher transaction fees associated qualified conditional rewards not yet available to the account holder because the account has not been activated; or successive card issuance due to a change in the account because new account numbers may be needed for each advancement of the account holder through account categories. Moreover, key recurring relationships may be interrupted such as when bill payments and card-on-file arrangements are disrupted so as to cause the account holder to re-establish a recurring payment relationship.